Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is Real Estate Ever a Wise Investment for Retirees?

Housing-Market / US Housing May 30, 2013 - 10:34 AM GMT

By: Don_Miller

Housing-Market

At one point in my life you might have heard me say something like, “I’ve probably made more money in real estate by accident than I have in the market on purpose.” For many years, you could buy good-quality property, as much as you could afford, and you were almost guaranteed to make money. That ended in 2008. Now folks are looking for bargains, hoping to profit from the crash.


So what has changed? I don’t have to tell you that the commercial and residential real-estate markets took a huge hit in 2008 and have yet to fully recover. Many folks saw the value of their homes drop by 40% or more, and their net worth drop right along with it. In the meantime, bank short sales have skyrocketed.

Opportunities to buy may be returning, but something else has also changed. Folks on either side of the retirement cusp are in a different place in life than when they bought their McMansions. Children have fled the coop, so their needs have changed. Also, retirees and folks approaching retirement cannot afford a do-over. We no longer have time to recover from investment losses... certainly not if we plan on staying retired.

When we conducted a survey of readers last fall to see what was on their minds, investment wise I mean, real estate investing was in the top 3. The other two were annuities and income investing. We’ve covered both several times, most recently here and here.

With real estate investing a hot topic, I’d like to review the Money Forever Five-Point Balancing Test and see how it applies to real estate. It’s the test we apply to all of our investments, not just stocks.

  1. Is it a solid company or investment vehicle?
  2. Does it provide good income?
  3. Is there good opportunity for appreciation?
  4. Does it protect against inflation?
  5. Is it easily reversible?

Some real estate may indeed meet all five criteria, but folks of retirement age must be much more selective.

My wife Jo and I moved to Fort Myers, Florida in 1985 – about the time that the new airport opened, which allowed bigger jets access to the southwest corridor of Florida. I-75 was also extended south from Sarasota down through Naples and over to Miami. Real estate in the southwest part of Florida exploded.

I had a good friend who put together several partnerships to invest in property. Twenty of us would put up 5% each, buy land, get the necessary permits, and then sell the property to a developer. We did well on several parcels.

One parcel we bought, which I thought would provide the greatest return of all, we still own over 20 years later. We’re still paying property taxes and associated costs after all these years.

The situation is almost funny. We have to pay a farmer to “rent” some cattle in order to maintain our agricultural exemption on the property. While it seemed like a good investment when I was 52, I would pass on it today at age 73. Why? Those types of partnerships do not provide income, nor are they liquid. That means they fail no. 2 and no. 5 on our Five-Point Balancing Test.

We have friends who for years bought homes and apartments, fixed them up, and then rented them out. Some resold them and some converted apartments into condominiums, often doing very well for themselves.

Today these same friends want passive investments. They are quick to remind me that being a landlord means running your own small business. Their investments demanded a big time commitment; they were anything but passive.

Ask any active landlord and he will tell you of the amazing time commitment required – of the 3 a.m. phone calls from the fire department, the plumbing leaks and electrical mishaps, and the renters who never seem to pay on time. Retirees want to make money with their capital. They are not looking for a full-time job.

That’s why most folks on either side of the cusp of retirement are likely better off with investments that meet our Five-Point Balancing Test. That does not mean that rental property or buying property for appreciation is out of the question. But we’re looking for real-estate investments that are professionally managed and liquid. We’ve recently added a real-estate investment in our portfolio that meets all five points in our balancing test. Use this link to start a 90-day risk-free trial to Money Forever and get the full report on our real-estate investment.

Making money in real estate is no easier than it is in the stock market. It requires a lot of work, patience, and in some cases a lot of luck. Retirement is not the time for a “get rich quick” scheme.

We need investments that meet our five criteria. One area of real estate that sadly many retirees have been convinced is the next best thing to a “get rich quick” scheme is reverse mortgages. While not real estate investments as most people view them, they are often portrayed as a way to make easy money during retirement. In response to so many questions from readers about reverse mortgages we’ve put together a new publication called “The Reverse Mortgage Guide” to help you better understand what a reverse mortgage can and cannot do for you and whether you might be a good candidate for one. Click here to find out how to get this report for free.

© 2013 Copyright Casey Research - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Casey Research Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in